Part of a comprehensive plan for the future
Managing finances and making healthcare decisions can become increasingly challenging when an individual’s health declines. Have you ever thought about the consequences of losing mental capacity and becoming incapable of making your own financial and welfare decisions? This is when a Lasting Power of Attorney (LPA) becomes crucial.
A LPA is a separate legal document from your Will which allows you to appoint a trusted person (the attorney) to assist or make decisions on your behalf, providing peace of mind for the future.
Many people establish an LPA alongside their Will as part of a comprehensive plan for the future. Knowing that a trusted individual can make decisions on your behalf if necessary can be reassuring.
During your lifetime
With an LPA, you can rest easy knowing that a trusted person will manage your affairs if you cannot do so yourself due to illness, old age, or an accident.
Your appointed attorney will be able to handle your finances and property and make decisions about your health and welfare. The LPA can include specific instructions and general preferences for your attorney to consider, ensuring your unique wishes are respected and carried out.
Required legal capacity
To create a Lasting Power of Attorney (LPA), you must have the necessary legal capacity, meaning you can understand the nature and consequences of the document. If you lack the required legal capacity, you cannot establish an LPA, nor can anyone do it on your behalf.
Many people are unaware that their next of kin does not automatically have the legal authority to manage their spouse’s affairs without an LPA. As a result, decision-making processes can become lengthy and considerably more expensive.
In England and Wales, there are two types of Lasting Power of Attorney:
Lasting Power of Attorney for Health and Welfare
This type of LPA generally covers decisions related to:
Your living arrangements
Contact with others
Participation in social activities
Additionally, you can grant your attorney special permission to make life-saving treatment decisions.
Lasting Power of Attorney for Property and Financial Affairs
This type of LPA typically involves decisions concerning:
Buying and selling property
Property repairs and maintenance
Ensuring legal authority for your affairs
Without an LPA, no one has the legal authority to manage your affairs, such as accessing your bank accounts, managing investments, or selling property on your behalf. Many people mistakenly believe that their spouse, partner, or children will be able to handle these matters, but that is not the case.
Someone must apply to the Court of Protection without an LPA to gain legal authority over their affairs. The court then appoints a ‘Deputy’ to manage your affairs, which is more involved and expensive than appointing an attorney through an LPA.
To ensure that a specific person has legal authority over your affairs and to simplify the process and reduce costs, obtaining professional advice and establishing an LPA is essential.
Health and Welfare Lasting Power of Attorney
This type of LPA allows you to designate attorneys to make decisions about your healthcare, treatments, and living arrangements if you lose the ability to make those decisions yourself. Unlike the Property and Financial Affairs LPA, this document only becomes effective if you lack the mental capacity to make decisions for yourself.
If you can’t communicate your wishes, you could end up in a care home when you might have preferred to stay in your own home. You may also receive medical treatments or be placed in a nursing home that you would have refused if you could express your preferences. In these situations, your attorney, appointed by the LPA, can speak on your behalf.
Property and Financial Affairs Lasting Power of Attorney
This type of LPA enables you to designate attorneys to manage your property and financial assets in England and Wales. The LPA document can be restricted, so it’s only used if you lose mental capacity, or it can be applied more broadly, such as during illness, mobility issues or time spent outside the UK.
Don’t leave it until its too late
It might be too late due to a severe injury, accident, or illness when you realise you need protection.
Regardless of your perspective, establishing a LPA is the most effective method to safeguard yourself if you lose mental or physical capacity. The sooner you put it in place, the better off you’ll be.